Pages

Wednesday, August 3, 2016

Sorry if I sound wide-eyed, but I was mightily impressed when I visited China as a guest of the Australia-China Relations Institute. Obviously, we were directed to the best rather than the worst but, even allowing for that, it was still impressive. Those guys are going places.

In a hurry. I was struck by how fast-moving the place is – in several senses. We argue interminably about getting a high-speed rail link, while the Chinese just get on with it.

We took the bullet train from Beijing to its nearest port, Tianjin, 140 kilometres away. So smooth you didn't really notice how fast it was going.

The government-run China Daily announced while we were there the plan to have 30,000 kilometres of high-speed track built by 2020. You could be sceptical – except they already have 19,000 kilometres installed.

Tianjin, admittedly a city of 11 million, has the newest, fanciest, most cavernous cultural centre and municipal buildings I've seen. I tried not to wonder how much it all cost and where the money had come from.

So many of us have outdated perceptions about China. It's a poor country producing cheap clothes and toys and knick-knacks in sweat shops.

That used to be true, and in parts of the country still is. But these days China is a middle-income country anxious to get rich gloriously.

In the Tianjin free trade zone is a factory for the European-owned Airbus. All the jetliners it produces are sold in China.

Of course, we tell ourselves, any technology they use has come from foreigners, sometimes without proper recompense.

Don't be so sure. We visited Shenzhen which, until 36 years ago, was a fishing village just across the water from Hong Kong, before someone made it a special economic zone.

I remember visiting it in January 1984 on a tourists' day-trip from Hong Kong. It was a dusty country town with a big new hotel for foreign visitors and a few factories, plus stalls selling stuff to tourists. I bought a Chairman Mao cap with a red metal star.

Today it's a city of 10 million, with income per person of about $29,000 a year. It has maintained 45 per cent of its area as parks and forest by the simple expedient of having housing go up rather than out.

It still has some low-end manufacturers, but they're being encouraged to move inland or to some south-east Asian country, such as Vietnam.

Land and wages in Shenzhen are too expensive for low-value production. Last year in China consumer prices rose by 2 per cent, while the average wage rose by 8 per cent.

So manufacturing in Shenzhen is moving to the high-tech end and the services sector now accounts for 60 per cent of its economy.

Its businesses put huge sums into research and development. In 2014 R&D spending accounted for 4 per cent of Shenzhen's gross domestic product. In Oz it's about half that.

BYD – standing for Build Your Dreams – is a private company founded in the city in 1995. It started out making batteries for mobile phones, but is now well advanced with the research and development needed to fulfil its "three green dreams" of making solar farms, travelling renewable energy storage stations, and electric vehicles.

It still makes and sells conventional cars, but is more interested in its range of hybrid and pure electric cars and buses. It's best known in Australia for its electric forklifts.

Many Chinese cities seek to reduce pollution by capping the number of new cars they'll register each year. Buy a hybrid or electric car, however, and you avoid the lottery.

Buy an electric SUV and the government gives you a subsidy of about $27,000, reducing the price of BYD's model to $47,000. The subsidy will be phased out as the company gains economies of scale.

Before moving to Shenzhen, BGI began life in 1999 as the Beijing Genomics Institute. It's now one of the world's largest genomic institutes, using gene sequencing to develop antenatal tests for genetic abnormalities and to detect diseases earlier.

It has more than 800 scientists working for it, and a wall showing the many covers of the journals Science and Nature celebrating its notable discoveries.

Huawei was founded in Shenzhen in 1987 by Ren Zhengfei, a former engineer in the People's Liberation Army. It started as a manufacturer of office PABX phone systems, but is now the largest telecommunications equipment manufacturer in the world.

It ploughs a minimum of 10 per cent of its revenue back into research and development, spending about $12 billion last year. The company is staff owned, with Ren's share down to 1.4 per cent.

It has installed Australia's largest private 4G communications network for Santos' mining operations.

In China it helped the Shenhua coal company raise the capacity of its Shuo Huang railway to 200 million tonnes a year. Its 4G system permitting synchronous control of multiple locos allows single train lengths up to 3000 metres long, carrying up to 20,000 tonnes.

China is big; we think of ourselves as small. China is confident, impatiently pushing towards a better future; we are fearful, waiting for more luck to turn up.